Indian equities snap lackluster session tad below their neutral lines

Indian equity benchmarks snapped the volatile day of trade on a lackluster note as the frontline indices hardly budged from their previous closing levels on Monday. The key indices oscillated in an extremely tight range through the session and ended slightly in red as market participants remained on the sidelines lacking conviction amid weak macro-economic situation coupled with global growth woes. Market participants also remained on sidelines ahead of Industrial production numbers, which is due later this week, as IIP data is likely to be a key input for Reserve Bank of India’s next policy review on May 3. Sentiments also got hurt after RBI Chief stated that India’s current account deficit is unsustainable at its present level of about 5% of gross domestic product (GDP) and a deficit of about 2.5% of GDP will be sustainable, indicating that central bank will not change key policy rates in the next monetary policy.

On the global front, European counters traded firmly in the early session as investors remained optimistic on further stimulus hopes ahead of major meetings across the region. This helped domestic markets to get their green terrain back. However, disappointing cues from Asian markets took their toll on Indian markets due to which Nifty came below its crucial 5,550 mark. Asian equities ended the session mostly in red as ongoing tensions on the Korean peninsula weighed on sentiment.

Back home, foreign institutional investors (FIIs) sold Indian shares for three straight days after buying over $10 billion so far this year. The selling comes amid worries about the domestic economy and on lingering concerns about political stability. Selling in software pack too dampened the sentiments. Infosys stock declined by over a percent, on concerns ahead of April 12 earnings and as weak US non-farm payrolls raised questions about the health of the US economy, the sector’s biggest revenue generator.

Though, the losses remain capped as market-men got some support with Chief Economic Advisor Raghuram G Rajan expressing optimism of the economy growing by over 6 percent during the current fiscal. Stocks from power sector remained on buyers’ radar after Finance Minister P Chidambaram stated that the Cabinet will take a view on price pooling of coal to address the fuel supply issue. He also said that price pooling may assist in addressing the supply of fuel in a reasonably satisfactory manner. Meanwhile, telecom sector stocks like Bharti Airtel and Idea Cellular edged higher after the Supreme Court allowed the telecom companies to continue 3G pacts until next hearing on April 11.

The NSE’s 50-share broadly followed index Nifty declined by just 10 points a tad below the psychological 5,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dipped by twelve points to end below its crucial 18,450 mark. Moreover, broader markets too struggled during the session and ended the session slightly in red.

The overall volumes stood above Rs 0.95 lakh crore, which remained on the lower side as compared to that on Friday. The market breadth remained in favor of advances as there were 799 shares on the gaining side against 906 shares on the losing side while 626 shares remain unchanged.

Finally, the BSE Sensex lost 12.45 points or 0.07% to settle at 18,437.78, while the CNX Nifty declined by 10.30 points or 0.19% to end at 5,542.95.

The BSE Sensex touched a high and a low of 18,504.48 and 18,402.93, respectively. The BSE Mid cap index down by 0.18% and Small cap index was down by 0.13%.

The top gainers on the Sensex were, Bharti Airtel up by 3.90%, BHEL up by 2.62%, Cipla up by 2.19%, Hindustan Unilever up by 1.51% and Dr Reddys Lab up by 1.44%, while Sterlite Industries down by 1.85%, L&T down by 1.78%, HDFC down by 1.62%, Wipro down 1.39% and Jindal Steel down by 1.30% were the top losers on the index.

The top gainers on the BSE Sectoral space were Consumer Durables up 1.18%, FMCG up 0.77%, Health Care up 0.71%, Power up 0.64% and Oil & Gas up 0.55%, while IT down by 0.98%, Capital Goods down 0.87%, Bankex down 0.79%, Metal down 0.61% and TECk down 0.36% were the top losers on the sectoral space.

Meanwhile, the Reserve Bank of India Governor D Subbarao is expected to inform the Parliamentary Standing Committee on Finance on April 09 about the final guidelines for award of new licences in the banking sector. The panel has been tracking the issue since the RBI released the final guidelines for new banking licences. 

As per the RBI final guidelines, business houses, state-run enterprises and non-banking finance companies (NBFCs) having 10-year impeccable track record are eligible to apply for licences to set up banks. However, it is expected that the RBI would get difficulty in passing the bill as the left parties have already opposed the move.

Meanwhile, the Communist Party of India (CPI) has also said in a statement that the banks set up by the big business houses will increase the scope for large-scale financial malpractices. The recent scams involving big business highlight the danger of financial swindles in such banks that will deprive the people who deposit in such banks of their hard-earned savings.

Earlier in 2011, the panel had informally discussed the issue with certain members and had expressed concerns about RBI’s move. On the other hand, several corporate bodies have already evinced interest in starting new banks. Presently, Indian banking industry consists of 26 public sector banks, 22 private sector banks and over 40 foreign banks.

The CNX Nifty touched a high and a low of 5,569.20 and 5,537.05 respectively. 

The top gainers on the Nifty were Reliance Infra up by 3.48%, Bharti Airtel up 3.27%, BHEL up 2.73%, Ambuja Cement up 2.28% and Cipla up by 2.24%.

On the flip side, the top losers of the index were, Asian Paints down by 2.99%, Ranbaxy down by 2.37%, PNB down by 2.11%, Axis Bank down by 2.05% and Sesa Goa down by 1.97%.

Most of the European markets were trading in green, France’s CAC 40 up by 0.69%, the United Kingdom’s FTSE 100 up by 0.30% and Germany’s DAX up by 0.34%.

Asian markets ended mostly lower on Monday tracking a disappointing US jobs data. Meanwhile, investors were on selling spree amid lack of positive triggers from the region, which also contributed to the market’s decline. Shanghai Composite closed lower as property market curbs dragged down the markets. However, bucking the trend Japanese market went home with green mark after touching a 4 1/2-year high as yen continued to weaken against the US dollar in the wake stronger-than-expected monetary easing measures announced by the Bank of Japan.